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Eleven million trucks. That’s how many 18-wheelers needed to rumble across northern Indiana in 2010 for the state’s 157-mile toll road to break even.

Unfortunately, only about half that many did and the road came up $209 million short.

This sounds like the beginning of yet another story about recession-ravaged states bleeding cash. And it is, sort of. The twist is that the Indiana Toll Road is managed not by the state, but by a group of corporate investors, part of a public-private partnership experiment intended to show how businesses can help government run more efficiently and save taxpayers money—all while turning a profit.

Politicians from both parties have held up such private-sector alliances as a model for the future, as cities and states find it increasingly difficult to shoulder the enormous cost of building and maintaining roads and bridges. California, Illinois, Michigan, Kentucky, and Georgia are all courting investors, hoping to strike deals in which corporations will assume some of the expense and risk in exchange for a share in the profits. This money-loser in Indiana shows how difficult it can be to apply business principles to sprawling public projects.

Now five years old, the Indiana deal has yet to turn a profit, or break even. Two overseas companies—Cintra Concesiones de Infraestructuras de Transporte, a unit of Madrid-based Ferrovial, and Macquarie Infrastructure Partners, an investment fund managed by Macquarie Group of Sydney, won the right to run the road with a daring $3.8 billion bid—$1 billion more than the next-highest offer. The companies each owned a 50-percent stake of the project, which was backed by several overseas banks. The group then attracted other investors who bought pieces of the deal.

It turned out to be a bargain for the taxpayers of Indiana. The state received the upfront payment and has avoided more than $100 million a year in operating costs.

“The state got a great deal,” says Jane Jankowski, a spokeswoman for Indiana Gov. Mitch Daniels, a Republican. “The lease agreement contains numerous protections for the taxpayer and travelers and ensures the continued successful operation of the road.”

The private investors haven’t made out so well. Had the road been profitable, they stood to make millions per year over the life of the 75-year project. As it is, they have not been able to get past the debt they incurred in winning the bid. They have met their annual debt payments only by borrowing money and may default before loans mature in 2015, according to disclosure documents from Macquarie Atlas Roads, one of the investors.

The project’s 2010 prospectus said that revenue from the highway is “expected to remain insufficient to cover debt service obligations over the medium term.” The document cautions that “any default under the loan documents may lead to lender actions which may include foreclosure of the project assets or bankruptcy.”

Even Governor Daniels, who had enthusiastically backed the venture, recently said that the foreign investors had overpaid.

In an e-mail, Macquarie spokeswoman Paula Chirhart said the prospectus was prepared in 2009 during the global financial crisis and “was never stated as a forecast or an expectation.” She added that “we expect the Indiana Toll Road to continue to meet its debt service payments as they fall due.”

IBJreported in 2009 that toll road investors were struggling because of the economic downturn.

Patrick Rhode, a Cintra spokesman, said in an e-mail that more vehicles are using the Indiana road as the economy recovers. A reserve account was created to cover financial gaps that occur over long periods of time, he said. “We do not expect a default.”

Even so, the poor results could dampen enthusiasm for similar projects elsewhere. In Ohio, which faces a budget shortfall of as much as $8 billion over two years, lawmakers are considering a bill that would give Gov. John Kasich, a Republican, the authority to seek a sale or lease of the Ohio Turnpike. Kasich has optimistically suggested the road might be worth $3 billion. Given the way things are going next door, he may have a hard time finding takers willing to plunk down that kind of cash.

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